Angel or Devil: Who’s Really Investing In Your Start-Up?

What differentiates a great early-stage investor from someone no entrepreneur wants to take money from unless they absolutely have to?

Stopping the Syndrome

The tragedy of the syndrome is that it is fueled by good intentions. The founder wants nothing more than the company to succeed and the investor has no intention of destroying value in a company he’s invested in. But according to Manzoni and Barsoux, how people with power react in times of trouble can have a considerable and often deleterious impact on others.

Perception Matters

For their part, company founders can prevent the onset of the syndrome by understanding its potential impact and guard themselves from the performance drains that come from the downward spiral.

Real Angel Investors

Both founders and investors can take steps to prevent the potential unwinding of their relationship and their company. The investor must be aware of his role in shaping the CEO’s actions and serve as a trusted advisor rather than an overseeing elder.

Here’s the gist:

  • Investors who add value, not just money, are angels while those who destroy it are devils.
  • Devil investors can unwittingly destroy company value by perpetuating the “Set-Up-to-Fail Syndrome.”
  • Entrepreneurs and investors can both take steps to prevent the syndrome and preserve the relationship, especially in tough times.



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Nir Eyal

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